Execution It all comes down to execution now.
Dmitri said that capital expenditures for 2013 will be about $90 million. Considering that we have already lost 2 months of production, that will likely eat up all of Mart's operating cash flow for the year. Obviously, the dividend will have to be funded by borrowing, thus the need for the $100 million loan. One could claim that the dividend will be paid from cash flow, and the loan is for capital expenditures, but it really doesn't make any difference. Both have to be paid.
So getting the new pipeline up and running is a priority, although drilling additional wells to fill that pipeline is also required.
If they can get the new pipeline running by the end of Q3, they will have time to pump some serious volumes and get the working capital balance back into positive territory. Then we could safely say that the future, and the dividend, would be much more secure.
With perfect hindsight, it is obvious that they started the dividend too soon, as borrowing $70 million to pay the 2013 portion seems like a very bad idea. But, as so many have discovered, once you let the genie out of the bottle, it is incredibly difficult to stuff her back in.
I must say that Wade was being very conservative in his presentation, and I prefer that to some of the hyped CCs from other companies I have listened to in the past.